Fight over Internet sales tax continues

Although the details are still sketchy, Amazon’s decision to build facilities in Florida and begin paying the state sales tax on its Internet transactions is a significant development in the ongoing battle between Florida retailers and their online rivals.

But the fight is far from over, as Amazon only represents a portion of the online sales in Florida — estimated at roughly 10 percent of the transactions. Florida retailers, who have argued that they are at a competitive disadvantage because of the sales taxes they are required to collect, are still pressing for either federal or state legislation to resolve the issue.

“We would love to have them here as long as they are collecting the tax,” Rick McAllister, head of the Florida Retail Federation, said of Amazon’s announcement last week.

Gov. Rick Scott and Amazon said that the Internet retailer, which has long resisted paying the sales tax on its transactions, will spend some $300 million on new distribution warehouses in Florida and hire approximately 3,000 workers between now and 2016.

Full details of the Amazon agreement have not been released, including the location of the distribution warehouses. But a number of sites have been mentioned as possibilities, including Ruskin in Hillsborough County and Lakeland and Winter Haven in Polk County.

The construction of the facilities will give Amazon a “presence” in the state, ending any question of whether its sales to Floridians are subject to the sales tax. It will join other major retailers, such as Sears and Walmart, which already pay sales taxes on their Internet sales because they have stores in Florida.

But McAllister said Amazon’s decision only addresses some of the online transactions evading Florida’s 6 percent sales tax. Another big Internet retailer outside the scope of the newly announced deal is eBay.

With the failure of Florida lawmakers to act on Internet sales tax legislation in their 2013 session — in part because of opposition from Scott — Florida retailers are looking to Congress, where the Marketplace Fairness Act (MFA) cleared the U.S. Senate last month but remains in doubt in the House.

Nonetheless, advocates for a national solution to the issue of online sales say they are optimistic about growing support for the legislation in Washington, D.C.

“We feel pretty good about where we’re sitting right now,” said Jason Brewer, a spokesman for the Retail Industry Leaders Association in Alexandria, Va. Brewer noted the MFA is supported by a bipartisan coalition of lawmakers, with five Florida House supporters, including U.S. Rep. Dennis Ross, R-Lakeland.

Florida’s U.S. senators split on the issue, with Bill Nelson, D-Orlando, voting for it and Marco Rubio, R-Miami, in opposition.

Brewer said the legislation is pending in the House Judiciary Committee where action is likely to be slower than in the Senate. “It’s going to be a long process this summer as the Judiciary Committee wrestles with a lot of issues,” Brewer said. “We’ve got work ahead of us.”

Although some conservative lawmakers such as Ross support the measure, other lawmakers and anti-tax groups have criticized the bill as a “tax increase.”

Brewer, McAllister and other supporters say the legislation is aimed at correcting an inequity in the tax-collection system.

“Most people realize now that this is an existing tax that is just not collected,” Brewer said. “There’s a very compelling free-market case to be made to conservatives that government shouldn’t be picking winners and losers by subsidizing someone who does business online.”

If Congress fails to act, Florida retail officials said they will press their case in the Florida Legislature next year.

This spring, lawmakers considered similar proposals, including a measure (SB 316) sponsored by Sen. Nancy Detert, R-Venice. But the legislation never reached the Senate or House floors because lawmakers could not reach an agreement that satisfied senators, House members and the governor.

McAllister said the legislation will have to be retooled for the 2014 session since this year’s bills were largely aimed at getting Amazon to pay the sales tax. He said retailers would look at revamped bill that could capture other online retailers.

He also said even if Congress eventually passes a bill, Florida will have to enact its own legislation on online sales since the federal legislation will give the states the option of taxing the sales or not.

Lloyd Dunkelberger

Lloyd Dunkelberger is the Htpolitics.com Capital Bureau Chief.
He can be reached by email or call 850 556-3542.
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Last modified: June 17, 2013
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